Carlsberg has pledged not to increase the prices of any of its beers for the rest of this year, as the company prepares for the country’s impending sugar tax this July.

Carlsberg Malaysia Managing Director Lars Lehmann told FoodNavigator-Asia​ that: “W​e do not have any plan to adjust product prices to distributors and retailers this year, after the last adjustment that took effect on April 1st​. ​

Back then, the main reason cited for the price hike was escalating malt and barley prices, which remain chief concerns for the company currently, though it appears that no problems are foreseen with their supply for the rest of 2019

“We have seen a significant increase in the costs of packaging and raw materials. Packaging and raw materials are the highest contributor to rising costs with malt prices increasing due to bad barley harvests in Europe and Australia caused by exceptionally bad droughts and heat waves in 2018,” ​said Lehmann.

“Other factors include increased electricity costs and a rise in minimum wages which drove up contract labour costs.”​

According to the company, malt prices increased 15% to 20% year-on-year in 2019.

Other challenges​

At the company’s annual general meeting last month, other challenges highlighted included the country’s smoking ban implemented on January 1 this year at all food service outlets, as well as the continued issue of contraband beer​.

According to Lehmann: “The smoking ban is not helping our industry and that is a bit of a new phenomenon this year that is also impacting consumption in outlets where there is food.”​

As of last month, contraband beer still made up 25% of the total beer consumption market share in Malaysia

Zero-alcohol beer segment​

Responding to queries about intentions to expand into the zero or non-alcoholic beer market, Lehmann said that the company was ‘exploring’ this area.

“Our global sustainability ambition towards ZERO Irresponsible Drinking includes the availability of alcohol-free brews in the market,”​ he said.

“While beer provides a quality low-alcohol choice, there are occasions when consumers also look for options that do not contain alcohol. For this reason, we are exploring non-alcoholic beverages as part and parcel of our on-going product innovations.”​

He added that Carlsberg Malaysia’s main focus and growth over the past three years had been reinvestment, brand innovation and consumer activation-focused, and that this path would be similar in 2019.